Four Marketing Investments For Seed-Stage Startups To Consider

Whether you’re a college student coding in your dorm room, a new mom figuring out an innovative parenting product, or someone dreaming of escaping the 9-5 routine, there are a multitude of reasons to become a startup founder. With over 100 million startups launched yearly—equating to a startup launching every three seconds—the global ecosystem for product development is at an all-time high.

As startup entrepreneurs are passionate about disrupting traditional industries, the key to shifting behavior is through user acquisition and growth. To go from zero customers to scale takes calculated, strategic decision-making and investment capital. For a seed-stage startup, funding is still limited to bootstrapping or smaller investments. Crunchbase found the average seed round to be $1.05 million and the median to be $527,000 after analyzing global startup data. Because of this initial stage of capital, entrepreneurs need to be scrappy in their marketing implementation. These early efforts will prove if the minimal viable product has product-market fit.

Tim Fong, a startup investor, is a firm believer in minimal marketing budget for seed-stage companies. ”Marketing spend should be a small percentage. Most startups have not quite found product-market fit. At this stage, this spend should be geared to testing out the thesis on target customers while building the product.”

So, don’t spend all your money on marketing. But do invest in these four marketing efforts to find out if your product has traction:

Brand positioning

Before reaching out to customers, it is imperative to solidify your brand positioning to understand your target audience and competitive differentiation. If done correctly, the mention of your brand will evoke an immediate response that sets you apart from your competitors—or even better, make people think, “there’s nothing like that out there, and I want it!”

Who (statement of need or opportunity)(Product name) is a (product category)That (statement of key benefit).Unlike (competing alternative)(Product name)(statement of primary differentiation).

Ashley Wellington-Fahey, CEO of seed-stage startup, The Relish, used this technique to create her brand positioning:

For female fans on social mediaWho care about sportsThe Relish is a distributed video networkThat creates original shows from a woman’s perspectiveUnlike traditional sports media outlets, The Relish offers an entirely new brand voice with a focus on sports entertainment and women’s empowerment.

“Our founding team worked together on all of this and would often seek feedback from our closest advisors, and in some cases, the fans themselves. We have the benefit of actually being the fan market we’re trying to talk to, so understanding this need from a personal perspective gives us an advantage when thinking about our position in the market,” Wellington-Fahey shared.

“This messaging enabled us to raise capital from top early stage preseed and angel investors and also work with social platform partners, sports leagues, teams, and brands interested in aligning with our fan market.”

By having your core product position down, you can then go on to expand to more creative communications.

Brand messaging

Your brand messaging will drive all aspects of your creative vision for your product—logo, colors, voice, communications—and should include key values and show differentiation factors as a way to connect with your proposed target audience. For startups, the messaging should include pain points for customers and the product value-add that differentiates from the current ecosystem. You can then create an extensive communications plan that’ll guide your website copy, investor deck, content, and sales collateral as you scale.

The Relish crafted their brand messaging with positioning in mind. “When developing our brand message we would start by asking ourselves, ‘is this on mission?’ and then go further and ask, ‘does it align with our position in the market?’ If the answer was yes, we’d move further along in development. If the answer was no, we’d scrap the idea and/or try something new,” Wellington-Fahey explained.

Test your thesis

Now that you have your brand messaging and positioning down, it’s time to test out your product, positioning, and messaging on real prospects. According to Cowen and Company research, one of the platforms offering the low cost and good return on investment is Facebook Advertising. On the advertising platform, you can create a set of different messages, creative, and audience groups to see which attracts the most engagement. You can then analyze the cost per clicks or impressions and any conversions happening on your website or in the app store. By constantly iterating on what is working and not, you can hone in on your messaging and brand.

Gabe Moncayo, CEO of Always Hired, a seed-stage startup sales bootcamp, used Facebook ads for scouting prospective students. “Spending money without a guarantee of return is nerve-wracking for an early-stage startup. When cash is tight and expectations are high, the margin for error is slim to none. We started our paid acquisition campaign with Facebook ads. What I like is that the first week I could start with only five dollars a day. After a week or two, we increased the budget to ten dollars a day. After 30 days, we had a ton of data and understood what type of demographic was engaging at the highest rate—we found our ideal customer. From there, we increased our spend more than tenfold.

“Moreover, we were able to take that newly found ideal customer and run similar targeted campaigns across all channels. An insight we found beneficial was to still start slow on other channels as the numbers will always vary by source. In the last three months, this strategy has yielded huge results, including a 100% growth in our business.”

Build your community and communications

Social advertising is the first step in user acquisition. However, the best way for seed-stage startup companies to start building relationships and a community is through email marketing. You’re able to communicate updates to customers on product features, have them learn more about your team, read blog content and, ultimately, purchase the product. Additionally, these early subscribers can provide feedback, as well as become brand advocates. As your startup grows beyond the seed stage and you acquire new subscribers through various distribution streams, investing in email campaigns—whether drip campaigns, daily newsletters, win-back programs, or sales promotions—will be fundamental in accelerating growth and limiting churn.

If executed correctly, these foundational marketing initiatives will set you on the path to the next round of financing. More importantly, they’ll be key to achieving brand longevity.

Stay tuned for the next installment in this startup marketing series where I’ll cover what you need to do for marketing once you’re post-series A and preparing for series B.